It has been just over a week since the Beta launch of Jellyfish.com was announced in the Wall Street Journal and we’ve been extremely pleased with the great coverage and feedback we’ve received to date. You can review a summary of some of the Jellyfish media coverage here.

Many of the articles and blog posts highlighted the great potential of Value Per Action (VPA) Search Advertising to be a major disruptor to the Pay Per Click model. This was an important goal of our beta launch: get people talking about VPA and thinking about better ways to connect buyers and sellers online.

Our mission at Jellyfish is to bring consumers directly into the value created by the advertising auction for their buying attention, and many of the articles and posts recognized the huge potential this represents. I think Aneil Weber summed this up nicely with the following comments on Jellyfish:

This is the model that brings the buyers interest into the equation. Basically, by altering the commission to Jellyfish, retailers are essentially “bidding” for our business. Jellyfish makes it really easy to figure out which retailer is the cheapest based upon price and commission pay out. Instead of just bidding to get in front of our eyes, these retailers are bidding for our actual business via virtual negotiation.

This is the power we see in our VPA search advertising; the consumer directly benefits in lower pricing through a behind-the-scenes advertising auction that is risk free to retailers. With today’s report that advertisers are reducing spending because of PPC click fraud, this couldn’t be more timely in my opinion.

I also wanted to highlight and respond to some of the negative feedback and challenges to the Jellyfish model we’ve seen.

1. Cash back isn’t new, you guys aren’t anything revolutionary. I agree that cash back, deal sites, coupons, etc. have been around for some time. And we’ve never claimed at Jellyfish that the concept of cash back (ala eBates or FatWallet) is something we’ve invented. It isn’t. What we are trying to do is MUCH different and more radical than a simple cash back site that contains a directory of links to stores and static cash back percentages. The critical difference in the Jellyfish model is that we’ve incorporated cash back into a dynamic search marketplace, where stores compete for attention at a product level using cash back in much the same way they bid for attention at the Pay Per Click engines like Google, Yahoo! and Microsoft. Google started its PPC auction at .01/click and many of the keywords are orders of magnitude more expensive now. As that competition happens at Jellyfish, consumers will share at least 50% of the gains. This is much different than simple cash back affiliate marketing.
2. Your Search Functionality isn’t Great and You Have Limited Products.As I mentioned in my VPA post announcing Jellyfish, we wanted to be first to market with this concept and we made the decision (like many companies) to launch in beta with limited search functionality and products. I’ll continue to keep you updated on our progress, but we’ve already made substantial changes to our search features and are adding new products on a daily basis.
3. The Savings Aren’t That Substantial. See my answer to number 1. The bidding has just started. I’m very excited to see what retailers that are pulling back on their PPC advertising will do in our risk free channel.
4. Paying People is a Gimmick. People comparision shop online in large part to compare prices and find the best value. I personally don’t think that creating an advertising model that automatically lowers prices vis a vis other shopping search engines is a gimmick.
5. Retailers will Just Jack Up Their Prices and Commission Levels. I’ve seen this several times in blog comments, but this really isn’t possible. We sort results by net price which factors in both the store price and the total cost after our cash back. Thus, the old method of “let’s raise our prices and constantly kick out coupons” won’t work on Jellyfish. This is yet another difference from a simple cash back site.
6. Google, et al. will Copy You. Not necessarily a bad thing I agree with Om Malik that Google Checkout is simply Google’s first step to CPA, but I think changing how your company makes money is something that none of the major engines is going to do overnight and certainly not because of a start up like Jellyfish.
7. People are Lazy and You Won’t be able to Curb their Habits. This is our key challenge in my humble opinion. We are banking on the fact that when you have your credit card in your hand online, you are going to think of Jellyfish and wonder “why would I buy anywhere else?” But you’re right, Mr. Naysayer, without lots of people buying, Jellyfish will never reach the game changing status we hope to attain. I’ll certainly keep you updated on our progress.

This entry was posted on Thursday, July 6th, 2006 at 8:00 pm and is filed under Click Fraud, Jellyfish Launch. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.